Crane 100 MF Index Down to 0.08%

Aug 04 20

Money market fund yields continue to bottom out just above zero -- our flagship Crane 100 was down a basis point in the last week at 0.08%. The Crane 100 Money Fund Index fell below the 1.0% level in mid-March and below the 0.5% level in late March. It is down from 1.46% at the start of the year and down from 2.23% at the beginning of 2019. Over half of all money funds and just under a third of MMF assets have since landed on the zero yield floor, though many continue to show some yield. According to our Money Fund Intelligence Daily, as of Friday, 7/31, 521 funds (out of 850 total) yield 0.00% or 0.01% with assets of $1.638 trillion, or 33.0% of the total. There are 194 funds yielding between 0.02% and 0.10%, totaling $2.273 trillion, or 45.9% of assets; 120 funds yielded between 0.11% and 0.25% with $872.1 billion, or 17.6% of assets; 15 funds yielded between 0.26% and 0.50% with $173.6 billion in assets, or 3.5%. No funds yield over funds yield over 0.50%. The Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 671), shows a 7-day yield of 0.05%, down a basis point in the week through Friday, 7/31. The Crane Money Fund Average is down 42 bps from 0.47% at the beginning of April. Prime Inst MFs were down a basis point to 0.11% in the latest week and Government Inst MFs were flat at 0.04%. Treasury Inst MFs were unchanged at 0.04%. Treasury Retail MFs currently yield 0.01%, (unchanged in the last week), Government Retail MFs yield 0.01% (unchanged in the last week), and Prime Retail MFs yield 0.06% (down a basis point for the week), Tax-exempt MF 7-day yields were down a basis point at 0.04%. (Let us know if you'd like to see our latest MFI Daily.) Our Crane Brokerage Sweep Index, which hit the zero floor almost four months ago, remains at 0.01%. The latest Brokerage Sweep Intelligence, with data as of July 31, shows no changes in the last week. All of the major brokerages now offer rates of 0.01% for balances of $100K. No brokerage sweep rates or money fund yields have gone negative to date, but this could become a distinct possibility in coming weeks or months. Crane's Brokerage Sweep Index has been flat for the last ten weeks at 0.01% (for balances of $100K). Ameriprise, E*Trade, Fidelity, Merrill Lynch, Morgan Stanley, Raymond James, RW Baird, Schwab, TD Ameritrade, UBS and Wells Fargo all currently have rates of 0.01% for balances at the $100K tier level (and almost every other tier too). Fin-tech "robo" advisor firms Betterment, Wealthfront and Robinhood have also cut rates and are offering 0.40%, 0.35% and 0.30%, respectively. In other news, see Bloomberg's "Fed Is Headed for a Clash With Hedge Funds, Other Shadow Banks", which says, "The Federal Reserve and other central banks are heading for a collision with shadow lenders -- the firms with a sinister nickname that are increasingly dominating global finance. Even as policy makers struggle to reopen their economies in the midst of the coronavirous pandemic, they've launched a review of what went wrong with markets in March, when a worldwide dash for cash by investors nearly crashed the financial system and forced unprecedented rescue actions by central banks. Their focus is on loosely regulated money market and hedge funds, mortgage originators and other entities. Already, some watchdogs have pointed to highly leveraged trades involving U.S. Treasuries as one source of the turmoil."

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